ITIL 4: Connecting key concepts – Part 1

Products, Services, and Service Relationships

Over the next few weeks we will publish a blog series to give you the big picture of ITIL® 4.

A bit of context before I start: When I was in India last November, I was challenged by a group of trainers to create a single diagram on a flipchart that depicted all the key elements of ITIL 4. Not to blow my own trumpet, but I did come up with a diagram which shows how key concepts of ITIL 4 come together to create a flexible and effective service management architecture. Over the next few weeks, I will walk you through the diagram in three blogs and videos.

I’d like to start off by talking about a fundamental change that is needed in service management: value is co-created, not delivered. In other words, the activities that a service provider undertakes do not create value by themselves. Value is realised only when the consumer engages with the service provider through the means of a service relationship. For further reading about value co-creation, use your favourite search engine to look up “Service Dominant Logic”. Be warned, some of the links will be academic journals, or focused on marketing. I rather like this blog post as an introduction to the topic.

And so, in ITIL 4, we have modified the definition of a service:

Services: A means of enabling value co-creation by facilitating outcomes that customers want to achieve, without the customer having to manage specific costs and risks

Long-time ITIL practitioners will recognise the changes made: the use of “value co-creation”, and the clarification that the customer doesn’t have to manage specific costs and risks.

And so now let’s talk about products and services. These terms are often used almost interchangeably, especially when there isn’t much differentiation between them. So, for example, is the mobile bank app you use on your phone a product, or a service? The focus of product management is typically on technology components – software and infrastructure – but this can be generalized to the following definition:

Products: A configuration of an organization’s resources designed to offer value for a consumer

So, in ITIL 4, the product is a configuration of resource that have the potential to co-create value with customers (or more broadly, with consumers). The service provider might have a product, or portfolio of products, that have the potential to co-create value with multiple customer segments.

Thus, we find the service provider can use its product portfolio to create one or more service offerings. These service offerings describe what the consumer can expect from the service – quality, cost, time, risks, and so on. Consumers choose the service offering that has the greatest appeal and enter into a service relationship where they interact with the provider’s products to co-create value.